KUALA LUMPUR (Oct 22): CIMB Thai Bank PCL, which is 94.83%-owned by CIMB Group Holdings Bhd, saw its net profit for the nine months ended Sept 30, 2019 (9MFY19) rise 35.5% year-on-year (y-o-y) to 728.1 million baht (about RM100.52 million), on the back of a 2.3% growth in operating income and a 32.7% decline in provisions, partially offset by a 17.4% increase in operating expenses.

In a statement today, CIMB Thai president and chief executive officer Adisorn Sermchaiwong said on a y-o-y basis, operating income rose by 236.4 million baht or 2.3% to 10.4 billion baht from a 3.1% increase in net interest income, on the back of loan expansion and higher interest income on investments and 97.8 million baht or 6.8% in net fee and service income arising from higher fees from insurance and underwriting.

He said other operating income decreased by 103.7 million baht or 13.4% mainly attributed to losses on financial instruments designated at fair value through profit or loss offset by gains from tradings and foreign exchange transactions.

Sermchaiwong said operating expenses rose by 1.1 billion baht or 17.4% largely due to higher general expenses and personnel cost attributed to an amendment bill to the Labour Protection Law which required higher compensation for employees who have retired or have been in service for over 20 years.

"Coupled with expenses incurred from the Fast Forward expansion strategy, the cost to income ratio was higher at 68.8% in 9M2019 compared to 59.9% in 9M2018," he said.

Meanwhile, net interest margin over earning assets stood at 3.32% in 9M2019, compared to 3.77% in 9M2018, owing to higher cost of funds.

CIMB Thai said as at Sept 30, 2019, total gross loans (inclusive of loans guaranteed by other banks and loans to financial institutions) stood at 240.2 billion baht, an increase of 5.5% from Dec 31, 2018.

It said deposits (inclusive of Bill of Exchanges, Debentures and selected Structured Deposit Products) stood at 238.2 billion baht, a slight increase of 1.7% from 234.3 billion baht as at end of December 2018.

It said the modified loan to deposit ratio rose to 100.9% compared to 97.2% as at Dec 31, 2018.

CIMB Thai said gross non-performing loans (NPL) stood at 11.1 billion baht, with an equivalent gross NPL ratio of 4.6% from 4.3% as at Dec 31, 2018, arising from certain corporate accounts and retail segments.

"CIMB Thai continues to exercise rigorous standards for credit risk underwriting and risk management.

"The bank also continues to focus on improving productivity, monitoring collection and managing all accounts closely and effectively," said Sermchaiwong.

At the midday break on Bursa Malaysia today, CIMB Group shares shed 0.6% or 3 sen to RM4.95 with 1.49 million shares traded.